A time capsule of the greatest financial mania in the history of mankind, told in real-time by regular folks and patriots. May future generations better understand the madness of crowds, and how power and money corrupt.

November 30, 2007

There are days when the fools in charge of our banks and our government do things so stupid and so short-term, you just have to shake your head in disbelief, and acknowledge the fact that we're run by monkeys. Monkeys trying to win the next election, monkeys trying to earn their next bonus.

This is one of those days.

Goldman Sachs' head Henry Paulson (oops, I mean Treasury Secretary) and the clueless Sheila Baier at the FDIC are due to announce a moral hazard toxic loan "bloodletting over amputation" plan soon.

This "keep your teaser rate" and "Vote GOP" plan would let people who stupidly got into loans and homes they couldn't afford keep their silly teaser rate (just until after Bush leaves office), and people who bought homes they could afford with fixed rate mortgages of course would get screwed in comparison.

Uh, two or three words come to mind:

Moral Hazard.

MORAL HAZARD.

MORAL F*CKING HAZARD!!!!

"Bank Failure" and "Class Action Lawsuits" also come to mind...

Treasury close to subprime aid plan

WASHINGTON (Reuters) - The Treasury Department is finalizing a plan with mortgage industry leaders that will hold interest payments steady for many subprime borrowers facing higher rates and possible foreclosure.

The mortgage representatives and regulators are focusing in on restructuring "2-28" and "3-27" subprime loans, which start with a fixed mortgage rate of up to three years but then reset to a much higher rate.

If the bank making the loan wants to keep the teaser rate for longer, then surely that's ok? I'm sure there's nothing in the contract preventing them from adjusting rates down...

If they don't want to and the govt forces them too, then all they have to do is look the contract. Somewhere on that loan application the borrower lied (otherwise they'd be able to afford the repayments and wouldn't need to have them fixed at teaser rates) and hence even if you fix the rates the lender can cancel the whole deal and ask for their money back/take the house.

Gina:I hate to see people lose their homes - but if they get an interest rate break THEN THE REST OF US SHOULD ALSO.

Terri M.:I'm so angry I can't even begin to tell you. This, in my humble opinion, is nothing more than trying to save Wall St. The proposal is going to be impossible, from a servicing perspective, to enact. This is still going to require re-underwriting. Reverifying income, reappraising because of lower values - just shaking my head (but my eye is starting to twitch from tension)

Mark:Is it too late to sign up for an unsustainable loan? Count me in! I'd like a piece of the Speculator Relief Bill the government is brewing up (and handing out).

Karl:No! The irresponsible over-spenders should not be given a mandated mortgage bailout. This mess is just the wake-up call to get Americans to stop drowning in debt. They must stop borrowing extensively every time they want something, but don't want to wait and/or save for it. Let them all get second jobs or be renters!

Anonymous:Why should we bail out speculators. If you took an ARM mortgage out that makes you a speculator. You gambled on where you thought interest rates were going. What makes me laugh is the amount of people that lost. Rates were at historic lows...WHERE DID YOU THINK THEY WOULD GO FROM THERE!!!!!!!!! Up Up and way. This country is turning into a JOKE.

i was wondering how they were going to try to manipulate the system to let these people keep their homes- couple that with the arabs infusing $ into the financials and china buying more of our debt to keep the American people buying their shit and you have something we havnt yet seen in our countries history- a global market bailout of our country- imo for two reasons first the nations we are in debt to/ hold our dollars CANT AFFORD to let the U.S. sliip into a rec. or depression. Second i read that the American consumer accounts for roughly 1/3 of the WORLDS GDP if we stop buying the WORLD goes into a recession and suffers high unemployment - i read where china would rather lose $50bil. propping up the U.S. economy than lose 10 million jobs that would go away or not be created if we stop spending-

scary shit folks! im sitting in cash wondering if i should just say screw it and have my money manager put me back into this joke of a stock market-with the new global economy can any major country go broke these days- i dont think so.

So I need help understanding this one. I don't know much about real estate.... but I'm a active bond invester. (I also invest in banks... but dumped most of them when their 10Qs started to worry me. Sold WM @45.)

This is a good thing right? No taxpayer money spent... the goverment doesn't gurentee anything. The only losers are the holders of the mortgage bonds. These are bond quickly becomming worthless... so isn't this a case of them squeezing as much blood from the turnip as possiable?

P.S. While I did sell my WM... I reciently bought 2yr senior WM notes yeilding over 8%. 6 month Countrywide bonds were yeilding over 20%... but I'm not that crazy.

They signed a CONTRACT. If you think credit is tight now... wait until this goes through. NO ONE will lend ANY money if a third party can arbitrarily step in an modify the terms of the loan. The entities that hold the paper on these loans will rightfully go batsh!t crazy if this is enacted.

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. — That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, — That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.

Is the bailout being financed with our tax dollars? If not I dont see what the big deal is. The contract is between the homeowner, the lender, and its investors. If they want to modify it then thats their business.

So people who can't afford to pay will get to keep the teaser rates. Those who can afford the higher reset will have to pay the adjusted rates. My bet is that 100%of the people will claim that they can't afford the higher reset rates. The moneyflow to the CDO tranches dry up except for the super senior notes. The banks will take it up the arse anyway as the bonds they hold will be worthless and in default. Here's a better plan for those FB's. You give them a 6.5% fixed rate over 50 years and if they can't afford it, then get the F out.

Um, what's going to happen to the value of those bonds that are based on 2-28s and 3-27s when they have to lower the interest rate below what the bond investors were expecting?

Wouldn't that crash the CDO market?

Would anyone invest money in a CDO again that has variable paper in it?

What about the people with negative amortization? They're already paying less than the total interest being charged each month. Do we just let their mortgage balance rise forever with unpaid interest (they can call it the infinity mortgage).

wish you bought an $800K house with a 1% teaser interest only neg arm now?

Nation, they are not going to freeze at the teaser rate. The freeze will be at the 8% rate, which will force homedebtors into bank slavery or foreclosure anyways. And don't forget that those homedebtors are up to their eyeballs with credit card debt.

Paulson just wants to keep his banker friends afloat for a little bit more, since Wall Street only thinks about the next quarter.

It won't work because those homedebtors are broke, living from paycheck to paycheck until they all get laid-off, get sick, or the car breaks down. Add rampant inflation to that equation.

The credit crunch is about banks not being able to sell packaged mortgages to suckers. That maneuver is not happening anymore. There are no more suckers to buy their rotten CDOs. Bernanke can lower rates to zero and Paulson can freeze rates as much as he wants, the disastrous outcome will still be the same.

No one believes in the US anymore, everyone knows that ratings from Moody's & Co. are deceiving, and there's no way for banks to sell their worthless junk papers to provide house financing.

It's a bank bailout. The banks don't want the keys to a house that has (or will) depreciate 20%. This keeps the FB making payments on an over-priced house. I suspect that many will want to walk anyway.

HPers are something else. Stop fucking spinning. This is going to help housing and hurt renters. Be man enough to admit that and stop this bullshit oh it will actually be worse for housing. No it won't It's called a bailout for a reason.

When everyone was foreclosing left right and center you said this would cause housing to crash. And it did to some degree.

The gubermint has now stopped foreclosures. Or at least slowed it down to levels that were there before this whole thing started.

The very reason for the crash is gone. If people get to keep their low rate, they can afford it. They won't sell desperately. They will stay in that house for the next 30 years if they can. I would if I had a 1% loan fixed for the next 30 years. And with no foreclosures, banks won't be having fire sales either. Stop trying to spin this simple fact away.

It's over Keith. You may as well pack things up. We lost. They won (again).

As a life long Republican I am disgusted by this. Although where do I turn? It's not like Hillary would have done any different.

Au contraire mon ami. They are that dumb. I plan to go one of two ways. I will either. 1) Never do business with banks again. or 2) Fill out every credit application that comes my way and bury all the cash I can borrow. Haven't decided which it will be. The system is going down.

i read where china would rather lose $50bil. propping up the U.S. economy than lose 10 million jobs that would go away or not be created if we stop spending-

scary shit folks! im sitting in cash wondering if i should just say screw it and have my money manager put me back into this joke of a stock market-with the new global economy can any major country go broke these days- i dont think so.+++++++++++++++++++That's deep.

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. — That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, — That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.

Treasury officials say financial institutions are likely to set criteria that divide subprime borrowers into three groups: those who can continue to make their payments even if rates rise, those who can't afford their mortgages even if rates stay steady, and those who could keep their homes if the maturity date of their mortgages were extended or the interest rates remained at the teaser rates. Only the third group would be eligible for help.

I doubt the govt/bankers will be all that helpful to the FB's...seriously...even if they wanted to...it's just to show that they are trying...election year. Say they do extend some ridiculous band-aid to most of those financial retards, it would be a Faustian bargain - they will pay one way or the other.

The FDIC's "formula" is to merge the insolvent organizations, using whatever value is left to make those with under $100,000 in deposits whole, while throwing under the bus the common equity holders, any preferred equity holders, and everyone else who happens to have a putative "claim" on the bank.

Treasury Secretary Henry Paulson told ABC News in an exclusive interview that the Bush administration's plan to help troubled subprime borrowers should be finalized soon -- ideally by next week.

"We're moving as fast as we can move," Paulson said in an interview with ABC News' Betsy Stark.

Worried About Foreclosure?

"We believe that the biggest issue is gonna be beginning next year when the number of [mortgage rate] resets is going to be increasing dramatically. And we're doing everything we can to deal with a complex problem and help the industry come together in a way which is going to be good for homeowners, communities and the economy overall."

We have certainly crossed over into the "outer limits" and "twilight zone" stage with this ridiculous freeze plan. With mortgage losses so well contained and consumer spending still good and inflation at extremely low levels, WHY THE NEED FOR A MAJOR RESTRUCTURING OF THE LOAN PROGRAMS? Sorry to shout, but the sheer lunacy of today's news has me dizzy. I need a beer. I have 80's glamour rock on my friday night rock blogging if anyone wants to get their lighters out

it is no different than saying; because there are about 10-12 million illegal aliens now living in our country, let's give them all an amnesty. this is no difference than what they're doing now. no wonder we are a freakin backward country.

The only way I can see this happening is if the lenders just tack the lost interest on the end and extend the term of the loan...effectively making it a permanent loan...roll the remaining balance over to the heirs when the homedebtor dies. Now that I think of it, a permanent loan is a banker's wet dream, so long as the payment keeps coming. It's the return of feudalism.

If the bankers by some miracle decide to eat the lost interest income, they'll have to raise rates for other people, which will further depress prices, putting the home'owner' further upside down.

I wonder how many are stupid enough to not just walk away? We'll see in the next couple years.

This proposal will primarily bail out banks who made subprime loans that are going bad. However, the subprime loans have already been sold to others who package them and sell them to investors("securitized") such as other banks and hedge funds.

Why do the banks need to be bailed out? They have made huge bucks on both ends of this deal. Sounds like they are the driving force, not the triaged home-debtor that is current on the mortgage payments, but can't afford the mortgage payments (whatever that means).

Simple logic should be enough to understand that the gov cannot bail out this situation. They just don't have the money, or actually they do, just that you need a lot of paper at paper's value to do it.Another point of fact is that those homeowners bought so they can flip or sell in a few years for profit. Even with teaser rates they are still losing money because they can't cash in by selling. And noone would buy their houses because they cannot get any more loans, even if the current ones are kept at low rates, which again I doubt possible. So in any even unless the government actually starts buying off the houses from the owners for more money than they own to the banks, which would cost trillions and trillions of dollars, there is no way out.

Moral Hazard? Effing Joking right?Americans(US Citizens) will not stand up to Washington DC.It's a moot point by now that Paying Taxes is paying to be bled by crooks.Bankruptcy is paid back no matter what.Paid back by the people in the form of Taxes,and Dollar devaluation(Hidden).Too Bad.You,Me ,and everyone else will pay.Congress will even appease all the Dickhead Voters,and give them their "No Bailout Resolutions",and the dipstick voters will be all happy ,and as retarded as ever. Thru the backdoor will come a dollar devaluation,and hidden excises,while the IRS does a head fake with lower income taxes.Suckers we are,and we deserve to be wiped out by an asteroid because we suck again for the millionth time in 230 years.The United Suckers of America-USA USA USA USA USA USA USA USA USA USA USA USA USA USA.

Anonymous said... Homedebtors may hate me for this, but *I* have a Section 8 voucher, and the property owners are paying *MY* rent! Bua ha ha ha ha....----------------------------------- Despite as lousy as that sounds I'll give you the credit.The Banks,London,and Washinton DC have us bent over the "moral barrell". There is a tard in my neighborhood who lauphs at the working folk while he gets it all for free.

Put it to ya'll this way-If the President came out tomorrow and said point blank in these words-"Americans will shut the F#CK-UP,and pay up,bail out my banker friends,pay higher taxes,take inflation gladly,volunteer your kids to die for the empire,and like it" You Know what would happen? Not a GODDAMNED thing.Oh sure,We'll all call our congressmen.Like that worked before. Effing DUH George Country we have round these them Parts Uh her her her her duhduh.Sunsabiches.

OK slow down there for 1 sec.Rates are still near 5 year lows, and they are definetly close to 40 year lows.Anytime you see a rate freeze statement come up you have to think ??? the banks counted on higher rates @ reset time. We're not there yet. They obviously want to freeze ... 2 years later when rates are hitting 10%, the rate freeze would expire. Anyone see that as a possibility.Further, say you have a 1% teaser, to have the freeze say today's rates are 6%. Will they be neg-am-ing that 5% difference to the principal and then when it will unfreeze in 2 years will that get back added and then on be 10% ??I think those that are going to get shafted are oblivious to this (obviously they're not going to read fine print this time) and instead of buying lubricant, they are making the shaft get bigger and come in faster.Cool.Cow_tipping.

I got a fixed rate loan last year. If this goes through, well....good for the guy who got the ARM instead.

But you guys are forgetting something. It's still got to be more than just talk. What they are doing is blabbing and seeing how much support there is out there for this proposal. Chances are good that nothing will come out of it.

I know that won't keep some of you guys from having a snit fit over the "unfairness" of it all. If you have a Bible, read the story of the prodigal son. Sometimes, good things happen to people you think are totally undeserving. Life's not fair, get over it.

Go back and have your wet dreams about getting a former million dollar mansion for 50k when the market crashes. You'll all feel much better.

In the meantime, I'm holding on to my house for the next fifteen or so years. Don't care if you think I'm a sucker or not for not waiting until the bottom, whenever that is. I can paint the walls whatever damn color I want, I can have a rottweiler if I want, and I love where I live. Life is good.

This kind of ‘extend-your-teaser-rate’ bailout is insane!We should boycott banks that do this!No, wait…This bailout won’t help at all It’s like pissing into the wind. Or, more like pissing on a house fire!Never mind the bank boycott.This extended rate won’t fix anything.Oh, it’s unfair. But don’t worry about it. It’s small peanuts.Inflation, and Ben dropping interest rates, will cause far more damage.

In the meantime, I'm holding on to my house for the next fifteen or so years. Don't care if you think I'm a sucker or not for not waiting until the bottom, whenever that is. I can paint the walls whatever damn color I want, I can have a rottweiler if I want, and I love where I live. Life is good.

Your behavior tell us that you are not so "happy homeowner" as you try so hard to appear, otherwise you wouldn't live in this blog trying to convince yourself that you did the right thing. You screwed up big time by buying a house last year.

What a sucker...and you still have the nerve to give financial advice to us, who sold at bubble's peak and now save tons of money renting? Sorry but we don't take advice from suckers. Oh, and one more thing, since you're fresh as a f*cked homedebtor who's leveraged up the wazoo:

Do you hear that noise? That's the sound of your precious "asset" losing value every month, while you keep making payments like a slave, instead of investing the savings in emerging markets and commodities to make a bundle. Wall Street and the NAR love suckers like you.

Go ahead and paint that wall, but don't forget to ask the real owner, the bank, if it likes the color.

Paulson can freeze anything he wants, because it won't make a difference. This meltdown came to stay:

Liquidity Woes Drive LIBOR Rates Higher

NEW YORK (AP) - The premiums that lenders demand from each other for loans are on the rise this week, signaling that banks are very nervous about having enough funds ahead of the year-end.

The Federal Reserve and European Central Bank have gone to great lengths to assure lenders they will maintain strong liquidity in overstressed capital markets as the year moves to its finish. But this has not been enough to persuade banks to lend to each other at attractive rates, so London interbank offered rates have reached sharp highs.

The London interbank loan rate, popularly known as LIBOR, for a three-month dollar-based contract on Tuesday reached 5.06 percent, it's highest level in a month.

This is a signal that banks' immediate funding worries are so severe that even extraordinary measures taken by central banks to maintain liquidity are not sufficiently reassuring to the lenders. Banks appear to be hoarding cash in the event they will need to write down more bad debt backed by souring mortgage collateral.

"There is a definite liquidity crisis," said Mirko Mikelic, a portfolio manager for Fifth Third Asset Management. "There is thought to be about $1 trillion in asset-backed commercial paper coming due before the year-end. Banks don't want to loan to each other."

...the Treasury initiative was aimed at the "middle group" of borrowers who have the financial ability to own a home but could not survive a big interest rate increase.....

This just reinforces what I've been saying here for a long time: If you think that subprime is bad, wait until the Alt-A starts hitting the fan. That "middle group" they are talking about is not the subprime debtors but the Alt-A, which is the last nail in the economy's coffin. Go ahead, put your legs up and enjoy the popcorn.

A little update on my big shot-real estate-investor neighbors who didn't show up from the Northeast for the usual Thanksgiving vacation.

I just checked public records and they both didn't pay their property taxes on due date. One neighbor is late on 4 properties he bought in 2004, including his own house. Total due just in property taxes for this big shot: $30k.

And that's just for the surrounding units, because there are a ton of homedebtors past due in the building. Meanwhile, the units keep losing value every month and the bottom is nowhere to be found.

To its credit, the White House has stood firm against Fannie and Freddie getting more aggressively involved in the mortgage market.

Nice try, GOP troll. The idea of bailing out bankers by freezing rates came from the White House & Paulson. Amazing how the GOP whores still try to defend these crooks. How much are you making to be a Bushbot? Go do something more dignifying for a living. Be a man.

Let's put the word out for the blood sucking lawyers start a class action suite on behalf of the responsible home buyers who are not getting a freeze. Hey lawyers, easy money, just sue everyone involved in the bailout.

Keith, please call the class action suit on the blog to attract lawyers.

I just heard that the freeze will really benefit the 80% of homedebtors that took Helocs to blow in crap from China, and not necessarily the retards who bought homes. So this is a bailout for the Baby Boomer shopping whores who used the house as an ATM.

I still don't see how this is a bailout. I haven't read aynything saying the government will spend money on this. Look if the banks think freezing rates is better than 2 million foreclosures, let them. It really is none of your concern.

On Thursday, the North Carolina Association of Realtors reported that sales of existing homes in October dropped 20 percent compared to a year earlier. In the Triangle, where existing and new home sales are combined by the Realtors, sales were off 14 percent.Local Realtor's Assoc Said:Housing is local...This area is bullet proof...the is no bubble to see here because we didn't see the increase like in Fla. Reality Yelled Back:Foreclosures everywhere and former home debtors on the local news standing in front of the 1400 SF cookie cutter home on .03 acre they paid $225K for and left the keys in the door as they drove away.They blame the bank for "Arm Twisting" them into more than they could afford.

I live in a rental and I painted my walls. I never understand this notion that you can't pain in a rental. My landlord said paint whatever you want, but when you move out you have to paint it back to white. That was fair and I agreed.

White is the cheapest color out there. I (my wife actually) painted 3 rooms. When we move we'll take a day and repaint them white. Cost will be $100 maybe for the paint.

Much better than losing $50K in house value.

Oh and my rental costs me $1800 a 2700 sq ft home on a 1.25 acre lot, with a pool, hardwood floors in every room, a sunroom, 2 fireplaces, french doors, and backs onto a national park with 5 miles of hiking trails literally in my backyard. My landlord pays for the maintenance of the pool, pest control and of course all repairs.

Were I to buy this house it would go for anywhere between $575K and $625K meaning a mortgage of more than twice my rent.

Rules for borrowers: 1. Yes you CAN spend yourselves rich. 2. If you are not big enough to force the bank to restructure your loan - find a category of borrowing that is SO huge overall that they will have to do something. 3. Its not illegal if everybody does it - and it won't be illegal if enough people to sink the banks do it.

Next question for Paulson: My credit card balance is really out of hand, and I missed a payment, and the bank jacked the rate up to around 30%. I need help. Can you force them to give me back the teaser rate on my $50k credit card balance?

Any bank can adopt any loss-mitigation/loan restructuring policies it wants, without waiting for the gov - and if it likes the gov guidelines, it can adopt those guidelines. If this program is totally voluntary on the banks' part and involves NO tax dollars - then nothing has changed. Since we don't have a lot of the details yet, and that M-Lec fund looks like a straw-man to dump this sh*t on the public, we may still be playing hide-the-salami with these guys.

The real buyout will be under the radar, when Fannie and Freddie assume more risk on both conforming and non-conforming. Essentially relieving the banks. Their will be little objection to this from the general public as few people understand that part of the process.

The real buyout will be under the radar, when Fannie and Freddie assume more risk on both conforming and non-conforming. Essentially relieving the banks. Their will be little objection to this from the general public as few people understand that part of the process.

I don't defend this administration on most points, but the fact is they resisted expanding Fannie and Freddie deserves some credit. Not enough credit to make up for the fact that most relevant regulators (other than Lockhart at OFHEO) were negligent in policing the banks that blew this bubble.

I suspect that this bail-out, though repugnant, would be far worse if left to Chuck Shumer or Barney Frank. But this is not such a partisan issue. Both parties are whores to the REIC. Likely both parties will be pandering to the "foreclosure victims" in 2008.

You should also stop blaming everything in your pathetic life on Bush. The common denominator of all your problems is you.

I don't defend this administration on most points, but the fact is they resisted expanding Fannie and Freddie deserves some credit. Not enough credit to make up for the fact that most relevant regulators (other than Lockhart at OFHEO) were negligent in policing the banks that blew this bubble.

I suspect that this bail-out, though repugnant, would be far worse if left to Chuck Shumer or Barney Frank. But this is not such a partisan issue. Both parties are whores to the REIC. Likely both parties will be pandering to the "foreclosure victims" in 2008.

You should also stop blaming everything in your pathetic life on Bush. The common denominator of all your problems is you.

The banks will go for this willingly, of course. Think about it. If they don't freeze these rates and they allow these homes to go into foreclosure, they lose money AND they drive down the value of other homes in the neighborhood (which, more than likely, have home owners who borrowed from the same bank).

Two people are going to get screwed. People who are renting and people who own these ridiculous CDO's which are effectively worthless.

If you own a home outright, you're still paying at a lower interest rate than these suckers (0% - you own) and all you pay is property taxes.

Saving money for a downpayment is soooo, like, old-fashioned and conservative.

Actually, all the people i know who did a zero down , liars special, neg am, 2 year teaser, idiot loan were conservatives, with george bush 2004 bumper stickers on their enormous suvs.

Everybody i know who rent are dems (Except brian, but he is one of those ACTUAL conservatives who is a ron paul supporter), know this bubble is bullsh!t, and are stacking up savings while waiting for its ill effects to pass.

Saving money for a downpayment is soooo, like, old-fashioned and conservative."

I'm willing to bet my last dollar most were republicans wanting to keep up with the Joneses, to look successful by living beyond their means. All republicans think about is MONEY, THINGS and having more MONEY AND THINGS. If they can't make enough by lying cheating or stealing it from others they simply fake it. Gotta have the trappings of wealth to run with the other shallow walking brainstem conservatives.

Funny how every multi-level marketing thing you get tricked into attending is FILLED with shyster republicans looking to f*ck over their friends and relatives for a buck.

Not to mention how 100% of the Wall Street crooks hawking CDOs were REPUBLICANS.

Poor Pete the misguided republican doesn't even know what lowlifes his people are.

Good, I think I'm gonna buy myself a Fuc*ing airliner. You know, it's always been my dream to have my own plane. Yeah, I'm jobless, but that doesn't matter : Once I get my mortgage from the government-bailed out bank(encouraging them to not check the people they loan to), I'm gonna get my own government bailout so that you guyz pay my plane... What the hell? I should instead aim for a space ship, so I can leave this planet. Man, I hate those foolish humans so much.

I suggest that any home debtor that takes a bail out from the tax payers and savers that follow the rules go here and confess your sins. http://www.subtleconfessions.comYou will have a lot to get off your chest after sucking the blood of the responsible people of this country.How can you sleep at night!

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. — That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, — That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.

The key word here is ABOLISH.

So people who can't afford to pay will get to keep the teaser rates. Those who can afford the higher reset will have to pay the adjusted rates. My bet is that 100%of the people will claim that they can't afford the higher reset rates.

Of course. This is why government bailouts and handouts never work in the real world.

I bought a 900K house with a 4.5% teaser interest only rate and a negative amortization option. I took the negative rate option by only paying a minimum amount. Now guess what? I won and all of you pessimistic HP'ers LOST! HA, HA, HA.

Wall street is actually mostly Democrat, from the traders to the execs. A lot of Catholics and Jews, so maybe their parents were FDR and Kennedy fans. I can't stand any of them, especially religious people, with their silly superstitions from some ignorant desert tribe.

"Here are three simple reasons the plan will fail:* This plan will encourage those on the edge to fall behind just to get a freeze.* This plan will foster resentment from those not being bailed out.* This plan is a transparent attempt to make people debt slaves forever.

Point number three above is really what this misguided plan is all about. It will fail because it is in the best interest of those underwater on their loans to make it fail. People are going to understand they are way upside down on their home loans, and those people along with everyone who resents others being bailed out will have every reason in the world to walk away. So walk away they will. Book it."

Face facts man. Sub-prime = minority. How many minorities do you know that are repubs?

The dirty little secret is that most of this subprime mess was blacks and hispanics buying houses they couldn't afford. Look at where the foreclosures are. Inner city Cleveland. Detroit. Las Vegas (40% Hispanic). Phoenix (close to 50% Hispanic). Riverside, California (over 50% Hispanic). Miami (60% Hispanic). Doesn't take a genius to figure out the common denominator here.

On the other hand not many foreclosures happening in La Jolla or Marin County. Hmm I wonder why that is.

These are the Top zip codes for foreclosures and the population breakdown from citydata.com

"Face facts man. Sub-prime = minority. How many minorities do you know that are repubs?"

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People. This is not just a sub-prime problem. I live in an upscale, all white, "Republican" town in South Orange County, California where homes cost between $400,000 - $3,000,000 with an average home price of $750,000.

This town was built during the bubble. Many owners put nothing down, opted for low teaser rates, and stretched way beyond their means to buy their homes.

I have 3 foreclosures in my neighborhood alone. 7% of the homes here are for sale - many of them distressed sales, due to teaser rates that are re-setting.

Worth mentioning are many other owners who are upside down but staying put for the time being.

This housing crisis is not a "subprime issue", it is covers a broad spectrum of buyers who but off more than they could chew and are totally screwed.

Here on Cape Cod alot of the newly minted upper income people are losing their homes.I think it's pretty obvious that these "investors" took teaser rates to leverage their money. They planned on selling in a couple years for a big profit.

First, I don’t really believe this is actually a bailout of the people! it’s just one of many band-aids that will ultimately drag out the problem and hurt more people over time, while temporarily obfuscating the massive balance sheet problems at our financial institutions.

While it is wrong, all this nonsense of locking the ‘Bubble Buyers’ teaser rates is only going to keep people in a house that will continue to fall in value, all the while, they think they are being helped if they continue making payments on a constantly depreciating asset. People really believe this is helping them? Well, clearly, they truly are idiots. But they already proved they were idiots by buying into what was so obviously a bubble. I don’t buy the “poor me” nonsense. Where is personal responsibility and due diligence? There were plenty of people out there warning what a massive bubble this was years before it peaked.

Fundamentals matter! Borrowing 2 or 3 times income is standard. Why did people think RE appreciation was going to continue in perpetuity? Paying 6, 8, 10 times incomes is not only TRULY STUPID - but actually SHEER LUNACY! PRICE MATTERS!

I’m not afraid to call these people stupid. They were idiots to buy the hype - Did these folks not learn ANYTHING from the internet bubble only 4 to 7 years before ? (depending on when they foolishly “bought” and overpaid for their bloated home)….

The fact is - this MASSIVE BUBBLE in RE prices will still deflate, albeit perhaps somewhat slower with these constant band-aids being placed on this gushing wound.

What this nonsense really does is allow the holders of all this bloated (realistically worthless) mortgage paper to continue collecting payments and thus pretending the so-called collateral is still worth the amount of principal they foolishly loaned out with “sub-prime” loans, etc. They won’t have to mark it to market and can continue to pretend in the fantasy prices.

In reality, they are HELPING THEMSELVES!

For example - say they loaned out $700K on some 1800 sq. ft. house in CA. (I’ve seen it) - Now that house is worth $550K and headed back to it’s 1998 price of $230K (or lower). It’s better to keep the idiot borrower in that house paying a lower rate on the $700K, then walking away and leaving them stuck and having to recognize and “write-down” that loss.

It’s simple - the banks and mortgage lenders REALLY REALLY don’t want to foreclose, because of the simple fact they’d have to recognize the HEAVILY REDUCED VALUE of the properties they’d be stuck with and burdened with unloading into a collapsing market with more and more inventory coming online due to this spiral. So this slows it all down, but DOES NOT AND WILL NOT STOP IT FROM DEFLATING DRAMATICALLY!

There is still way too much bullishness about prices and people think RE is going to come roaring back when the decline has only just started. RE WON’T COME BACK AGAIN! This was a once in a generation event (as most bubbles are) It’s simply not possible to repair this damage without decades of pain! That’s just reality….

Also consider that all these folks who overpaid for their homes by stretching to buy using these exotic loans, etc. aren’t really getting a favor by being allowed to “STAY IN THEIR HOME” - first of all, it’s not their home, that’s a myth. They’ll NEVER own it (short of winning the lottery). This “American Dream” nonsense is pure BS!

More like American Nightmare since at best they will be STUCK IN THE HOME THEY HAVE!

They will never have any equity build up in what will be a very protracted decline - and thus won’t be able to move because prices will continue to fall regardless of these band-aids being orchestrated. They’d actually be better off walking away now and renting, saving money and buying in the future when prices come back to reality sometime WAY in the future………

People should study Japan as an example of how Government interference / intervention (MORAL HAZARD) worked out for them.

Hint - It DIDN’T! RE prices are actually 80% lower than in 1989 and they’ve only this year had the first uptick in prices in 18 years. Funny thing is the Japanese people don’t trust it. Even after an 18 year and 80% decline, they don’t believe it’s a bottom. Talk about a change in psychology. We are at least a decade away from that here if we’re lucky because OUR BUBBLE IS MUCH BIGGER!!!!

Sadly, this is going to get so much uglier than most can even comprehend or fathom……….

But hey, maybe I’m too bearish. Let me just say I blame GREENSPAN for all of it. He’s the father of Moral Hazard!

Hi, I am a Realtor and none of my clients are in foreclosure. I have 50 million in sales and not old. I must say that I have never trusted a mortgage Broker and when I was told who to use or given signs and or flyers over the years they all went into the garbage. BTW!!!! I have worked ever Sat and Sun for the past 10 years. Evey CMA I have done over the past 10 years and you know who you are have said the same thing!!!! What is the highest comparable and I want that or more. You are all talking about your current purchases. Funny I don't hear any stories about when we were sitting together in your last home and you had to get "the most amount of money from the sale". So I should have said "sorry mr. and mrs. so and so. I can't raise the price per sq ft in your town anymore we need to get just under the highest last sale. It will secure all of our futures. By the way fuck you all

In the meantime, I'm holding on to my house for the next fifteen or so years. Don't care if you think I'm a sucker or not for not waiting until the bottom, whenever that is. I can paint the walls whatever damn color I want, I can have a rottweiler if I want, and I love where I live. Life is good.

They’d actually be better off walking away now and renting, saving money and buying in the future when prices come back to reality sometime WAY in the future………

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I hear this advice thrown around quite a bit - just walk away from your home....People, understand the impact this decision will have on your life. Your credit will be ruined. The prospect of future employment will be affected (employers routinely check applicant's credit and will refuse an interview or a job offer based on bad credit). Landlords also check credit and will not rent to you. The IRS will be after you for the cancelled debt (you're dreaming if you think forgiving the cancelled debt will be part of any "bailout" bill that Bush signs). The lender will go after you if you live in a "deficiency judgment" state. Good luck when you finally save enough for another home (after you're done paying off the IRS and lender judgment), because you will need it to get a loan.

People, this is why all these bubble home buyers are so totally screwed. There is no way out of this mess. Anyway you look at it, the home debtors will have to pay up. And pay up they should. It's called PERSONAL RESPONSIBIITY. Something my favorite presidential candidate Ron Paul talks about often and is missing from many people these days. You got yourself in this predicament. You dig yourself out of it.

It really is quite a quagmire that I thank my lucky stars that I am not in. (I have always followed the live within your means mantra)

OK. I'm busted by anon. I am a Republican. But not a troll. Democrats if they are smart could win on this issue if they heeded the needs of younger voters who trend Dem but are impressionable.

This is my recent post on Kudlow's blog- http://tinyurl.com/2vr2up

Ron Paul and Housing Panic related warning message to Obama and his staff.

From Friday's Kudlow & Co show www.kudlowsmoneypolitics.blogspot.com/

I think Obama was scheduled for Friday to speak about the housing bust- but he sent his staff member "Austin". Smart move by O. It's way too early to be staking out a position on an issue as controversial as a bail out. Support for a bail-out could very well clue in your young supporters what Democrat income redistribution means to them (ie. a lifetime of crushing debt to support the baby boomers to retire in style, travelling the world on the dole).

Kudlow provides good coverage of this issue and the political angles. Even if you don't agree with him, he is a smart guy who clearly has some influence on the public debate. He attributed an amusing analogy of the Super SIV as a trash can to a commenter on his blog.

You should also stop blaming everything in your pathetic life on Bush. The common denominator of all your problems is you.

Hey GOP whore, tell that to the almost 4,000 Americans soldier killed in Iraq and thousands more injured. Bush called an unnecessary war to transfer taxpayer money to the GOP cronies. That wasn't my fault because I never voted for those 2 freaks in the White House.

* Hispanics and blacks would never get loans for McMansions, no matter how crooked the system is. So there, in value, the republican scum beats minorities in the scam race.

Try to spin as much as you can, but the republicans are destroying this country with the help of those two oil men you geniuses voted into office twice.

Oh, one more thing, that phony war that you republican crooks invented or supported, which transfer trillions from taxpayer into the pockets of GOP cronies, is costing more than the housing ponzi scheme (yet another invention of GOP).

Sam said Support for a bail-out could very well clue in your young supporters what Democrat income redistribution means to them (ie. a lifetime of crushing debt to support the baby boomers to retire in style, travelling the world on the dole). =================================Y'all must be crazy. You sure as hell are unaware of what is really at stake here. The entire post Bretton Woods monetary/financial system is blowing up. Youre looking at this like it's a localized housing problem that occured because a few illegals "fibbed" on their loan applications.

This crisis is the culmination of every bad policy decision since 1964. And worse yet our goddamn culture has been destroyed by the "sex rock drug counter culture" of the 1960's and beyond. People are like zombies today and it's been decades since anyone did any productive work. And I mean decades.

So none of you will really respond properly to this crisis and therefore y'all require some leadership to carry you to safety.

The only institution that has the constitutional power to intervene and save your stupid butts is the US Government.

Just a question for the leftists out there- do you blame Clinton for the dot.com bubble? How was the dot.com bubble different than the real estate bubble?

Also, when the lefts mantra of "Each according to his needs, from each according to his abilities" is implented, should we measure a persons "needs" by the square footage of their overleveraged McMansion?

Or should me maybe use a high debt/ income ratio to show need. Clearly the botox-laden, Hummer driving, plastic house livin' stereotypical homedebtor has greater consumption needs than myself (or probably most people here).

Not defending Bush, but pointing out that it is possible the alternative will be worse, at least on the housing bubble/ economy.

Sam buddy, there's nothing worse than a dishonest, lying conservative with no ethics. But that's redundant in so many ways.

And the dot.com bubble didn't have the far-reaching effects on society like the housing bubble will. If you didn't buy internet stocks you were mostly ok. Plus, it's not all Bush's fault. It took the lack of oversight from the republican Congress to get us here. The same republican Congress that sanctioned the dot.com greed. See Sam, republicans live for nothing more than to make money by screwing other people.

Did not mean to make the last attack ad-hominen. Trying to make amusement of the handle "Bitter".

Yes, the Republican Congress should have given more oversight to lenders. They deserved to lose in 2006.

But, a Democratic regime would have enabled Fannie and Freddie to become more involved in this mess, hardly an improvement.

Whether housing or dot.com is bigger, they are very close. Dot.com faux wealth was $11 trillion whereas housing bubble faux wealth is $5 trillion, or so. But the housing bubble democratized extreme leverage, and so affected more people. This also meant that many of the "victims" had nothing to lose in the first place (0% down, NINJA loans). Almost everyone with a 401K or savings was affected by dot.com bubble. In both situations much "faux" paper wealth was destroyed.

To the extent both bubbles were based on greed and fuzzy thinking and both will bring on a credit crunch and recession, they are very similar.